FRANKFURT, July 30 (Reuters) - SMA Solar,
Germany's biggest solar company by revenue, said it will cut 12
percent of its workforce after competition from Asia and a
decline in Europe's solar sector forced it to lower its outlook
for sales and profit.

The 600 job losses by the end of 2015 are SMA Solar's second
major round of layoffs in as many years. The company has been
badly hit by falling solar power subsidies in Europe, most
notably in its home market Germany, where the company makes
about 28 percent of its sales.

SMA Solar shares were down 12.3 percent at 22.755 euros by
1000 GMT on Wednesday, their lowest level in almost seven months
and the fifth-biggest decliner in Germany's main stocks index
.

The company's profit warning follows that of German peer
SolarWorld which on Monday said it would not reach
its sales target this year, pointing to weak demand in its core
home market.

"Particularly in the core markets in Europe, demand has
collapsed even further than expected due to further cuts in
subsidies," SMA Solar Chief Executive Pierre-Pascal Urbon said
in a statement on Wednesday.

"The cut-throat competition is keeping pricing pressure high
in the industry," he said.

SMA Solar, the world's largest maker of the inverters used
to feed solar-generated electricity into the power grid, warned
it could make a loss of up to 45 million euros this year and at
best would break even. Previously, the company had expected an
operating profit of 20 million euros at best.

The company cut its 2014 sales target to 850-950 million
euros from 1.0-1.3 billion.

Urbon said the firm will cut its development budget to about
90 million euros ($120.60 million) per year from 102.5 million
last year, he said.

Competition from low-cost Asian peers has been a drag for
SMA over the past three years, gnawing away at its market share
and profit margins, which declined from about 27 percent in 2010
to 7 percent in 2012.

In response to the crisis, SMA earlier this year struck a
deal with Danish energy firm Danfoss A/S, which bought a fifth
of the German group for 302 million euros.
($1 = 0.7463 Euros)
(Additional reporting by Till Weber; Editing by Erica
Billingham)